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Thursday, July 18, 2013

Heritage Foundation: Workers Must be more Productive

From
the Washington Post: For a long time in America, earnings and productivity
went hand and hand: The more productive workers got, the more they made. That
relationship appeared to break down starting in the early 1970s, as productivity
increased but wages flat-lined.

According the U.S. Bureau of Labor Statistics, manufacturing
in the U.S. peaked in 1979 when there were over 19.6 million manufacturing
jobs --- but that has been on a downward trend ever since. And 1979 was also
when the total number of union
members had peaked out at over 22 million. And so it' no coincidence that
today the labor force participation rate is also at the
lowest since 1979.

As to wages since that time: James Sherk, a senior policy analyst at the
conservative Heritage Foundation, contends
total compensation, properly adjusted for inflation, has kept pace with
properly-measured productivity (on average).

The real problem, he says, is that far too many workers are stuck in
low-productivity jobs, particularly in the health-care sector. He argues
policymakers should be focused on helping those workers gain more skills and
move into more productive sectors — specifically, by looking for ways to
reduce the cost and increase the accessibility of higher education. (The healthcare
sector? What about retail and fast-food?)

While average wages have fallen by 7 percent over the last 40 years, Sherk
calculates total compensation has risen 30 percent. By using
his methodology for calculating worker's wages, Sherk finds there’s hardly
a gap between the growth in what an average worker earns and the average
productivity gains over the last 40 years.

What he does find persists is a gap between productivity and median worker
compensation. Sherk blames this on market forces, including globalization and
automation, pushing lower-skilled workers into low-productivity jobs. If those
workers could more easily and cheaply gain more skills — say, through widely
available, low-cost online education — they could compete for
higher-productivity jobs.

James Sherk in an interview: “The problem is, we need to
find ways to make more workers more productive. The focus of policy
should be to make it easier for more workers to gain more skills.”

American workers need to be more productive and acquire more skills? Is James
Sherk at the Heritage Foundation implying that if 20 million Americans (who are
either unemployed or can't find full-time work) were all healthy and robust
21-year-old athletes with a PhD in computer Science -- and they all had an IQs
of 175 or higher -- and they were all ambitious --- they would all be more productive, and therefore, they would all find good-paying middle-class jobs?

For Economic Wonks Only (This is far above my pay level, but if you
know of any economists who can make sense of all this, please have them explain
it to me. Thanks.)

This is per
a new report from the Bureau of Labor Statistics, via the Huffington
Post: "The economic recovery just keeps getting worse for the average
worker as U.S. employers squeezed their employees even harder than usual in
the first quarter [of 20123], leading to the biggest drop in hourly pay on
record." Worker
productivity is up, corporate profits, CEO salaries, and the stock markets
are all at record highs --- but workers
haven't been reaping the same rewards that their employers have been.
Average Americans today are making less, after inflation, than they made in
the early 1970s. Something has gone fundamentally wrong. American workplaces
are simply no longer working for those who punch timecards. Last year
Walmart's CEO Mike Duke made 796 times the average worker's pay and Target's
CEO made 645 times the average worker's salary. The rate of CEO
pay has far outstripped wage growth for the country's rank and file. A
recent report from the AFL-CIO found that CEO pay grew at a rate 127 times
faster than worker pay over the last 30 years.

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Bud Meyers writes about the economy, politics, Social Security, corporate outsourcing, labor statistics, the REAL unemployment rate, taxes and tax evasion, government and corporate corruption, and the plight of the long-term unemployed.